Protect Your Debtor’s Ledger From Trading Risks By Getting A Trade Credit Insurance

Bad debts cannot be prevented every single time even when you have very stringent credit management protocols and have a lot of working capital to keep the business in operation. As a business owner who is involved in the trade of goods, your debtor’s ledger becomes your biggest asset. When the money is lost because your customers did not pay you in time or became insolvent, the only way to bring back that money in circulation is through trade credit insurance.

By utilizing the complete credit solution offers by Niche Trade Credit, you can protect your business from such bad debts through trade credit insurance Australia. They have 3 decades of experience in their sector and can make a tailor-made plan to cover all the risks that your business is exposed to, based on your annual turnover and the trade market you are dealing with. Just get a business risk assessment for free and see if your company is exposed to major political trading risks or not.

Types of risk that can interrupt your cash flow in trading

Political risks:

  • Sometimes we trade with the government buyers or with buyers in countries prone to high political instability.
  • Any political changes, riots, change or cancellation of licenses, and addition of your buyer into a list of defaulters by the government can result in a huge loss of money.

Commercial risks:

  • This is mostly related to the payment capacity of your customer.
  • Late payments outside the credit term can affect instant cash flow and insolvency puts a serious risk on the company’s profitability.

Depending upon the country you are trading with, your risk of credit can be evaluated and your policy terms can be formulated keeping that in mind. Specialized insurance covers can be included if the risk for terrorism is high in the country to which you are exporting your goods.

Advantages of using trade credit insurance as a protection shield

  • You cannot rely on bad debt reserve for covering the cash lost when the debtors fail to buy.
  • This creates an imbalance in the current asset ratio for which protection in the form of credit insurance is necessary.
  • Credit insurance puts the cash flow back to where it should be, i.e., in running your business functions without any interruptions.
  • When the risks get lowered because you know you will not face a shortage in your working capital, you can work to expand your customer base and work on improving your relationship with existing customers.
  • The credit insurance agents have a more extensive database that can govern your trading risks with a particular customer so that you can expand your markets safely.
  • Credit insurance can also serve as collateral for banks if you require financing.

If you are new in business, you cannot possess the knowledge that is possessed by companies providing financial solutions. You can trust their expertise before venturing into new markets and at the same time protect your business by providing it a cover for the unpaid invoices.

October 19, 2021 admin